Tax credits dropped from £500+ to £42 - help!

Miranda7

Hello all!

I can see similar threads, and hope there's something that someone can identify in my situation to help.

My working families tax credit has just dropped from £500 to £42. With no warning. I knew they were going down from the news, and assumed as we'd earned a bit more last year we would have about half, but less than 10%????

I earn £13,600 from working a three-day week. My job is a 100-mile round trip and I take my toddler to a minder in the city where I work to save money - three hours in a car with a toddler every day is fun! So that costs £50 in diesel for a start.

My parents have him one day a week, leaviing me paying £67 a week in childcare.

My husband earns about £380 per week - I think this is £20k a year - for a 55-hour week. I think we'll be about £50 a month better off with the new income tax, but is there something I'm missing?

Surely there must be some incentive to work, even under the Coalition? Or do I have to wait till he gets free nursery in September? Just struggle through? It seems I will be earning about £20 for a 12-hour day, what with all the travelling...

Anyone?

melly1980

With there being several threads on these drops I just have to ask the question are these to do with changes in circumstances and all this bobbins about using last years actual wage to determine this years tax credits? The cuts from the government havent been that big to tax credits unless there are some stealth ones in there. A 2p extra taper and paying 70% of the childcare rather than 80% should not drop your award that much.

Miranda7

That's the thing - I've kept them up to date with changes to income and childcare through the year, but I haven't even received my renewal form yet, so it shouldn't be that.

I am, it has to be said, extremely confused.

melly1980

Miranda7 wrote: »

That's the thing - I've kept them up to date with changes to income and childcare through the year, but I haven't even received my renewal form yet, so it shouldn't be that.

I am, it has to be said, extremely confused.

Well I'll give you my example, Im not sure if it will help.

Last March I changed jobs from one that I earned about 29K to the current one in which I earn (for tax credits purposes after deducting my pension) 39K. Now all of this year (last April to this April) I have had a 40K salary but tax credits based on my circumstances of 29K, 4 kidswhich 1 an under 1 year old, this equates to 500 a month. However that award that I got last year accounted for the fact that my money was going up and they told me on that award the the money would go down to somewhere between 100 - 150 / month so I am expecting a huge drop anyway even if there were no changes to the system.

To me there just seems this time lag that even if you change your circumstances, you are still going to get a years worth of TC based on what ytour circumstances were the year before. When I got my award through for last year I phoned them up and told them there must be some mistake, I couldnt believe that they were going to hand 500/month out to a near top rate tax payer. I was embarressed to take it (but did :rotfl:)

DarkFallout

what is the age of the toddler, as far as I remember, the child tax credit was higher in the first year for having newborn ...

melly1980

DarkFallout wrote: »

what is the age of the toddler, as far as I remember, the child tax credit was higher in the first year for having newborn ...

the under 1 "bonus" was about 500 per year so that could only account for a 40/month drop if that was involved. Could be a contributing factor mind but not the full reason.

Miranda7

Hee! Yes, that sounds familiar - I rang them twice when we got £500, saying I was sure they were making a mistake as the previous year we'd got next to nothing despite earning sweet FA.

I think the system is twaddle if you have variable earnings - why is it based on last year's figure, yet you still have to call them immediately you have a change in circs?

DF - he's three months short of three, so in the middle bit where you don't get free nursery and don't get the under-ones payment.

melly1980

Miranda7 wrote: »

Hee! Yes, that sounds familiar - I rang them twice when we got £500, saying I was sure they were making a mistake as the previous year we'd got next to nothing despite earning sweet FA.

I think the system is twaddle if you have variable earnings - why is it based on last year's figure, yet you still have to call them immediately you have a change in circs?
.

You do phone them but they dont necessarily change anything. I told them about my 10K increase in wages, they adjusted my award notice but I still got the 500 however they did predict the big drop the next year.

tobysmummy_2

We have had a letter through this morning telling us that our tax credits are dropping from £500 per month to ZERO!

Ours was based on earning a joint income of around £25,000 in 2009-2010 and having a toddler in full time childcare (£850 per month). (Hubby had been made redundant for some time during this tax year, so our earnings were lower) Last year, our earnings went up to around £43K as my husband was back in work after redundancy, yet we were still entitled to the £500, which I phoned and questioned but were assured we were entitled to.

I had no notification that this might happen, just a letter saying "we're not paying you anymore!" Income-wise it might look as though we earn a decent wage, which is true, but couple this with what we have to pay out each month in childcare, mortgage, bills, petrol, food etc, we are actually left with very little money to "play" with, and are not in a position to save for the future which really upsets me. Earning what we do, and working as hard as we work, we should be able to afford to go on a nice holiday this year, or treat ourselves to some luxuries, but we simply can't - our tax credits are needed to afford a decent quality of life - now we will be on the breadline because of our drop in income and increase in everything else. I'm struggling to understand how the average working family are allowed to be the hardest hit in the midst of these cuts and overhauls buy the coalition.

Sorry for the rant, and sorry I can't offer any help or answers to the OP, just wanted to say that I can identify with your situation and all we're doing is taking a long look at where we can cut back to try and manage, and hold out until school starts in september and childcare fee's stop.

Good luck to us all!

MissMoneypenny

tobysmummy wrote: »

and are not in a position to save for the future which really upsets me. Earning what we do, and working as hard as we work, we should be able to afford to go on a nice holiday this year, or treat ourselves to some luxuries, but we simply can't - our tax credits are needed to afford a decent quality of life -

Welfare payments (tax credits are welfare too) should be there to help those in need: to clothe, feed and house them. Welfare should never be there for claiments to use as you descibe "saving for the future", "go on a nice holiday", "treat ourselves to some luxuries". It is madness that welfare was ever allowed to do that.

Before tax credits, couples accepted that they wouldn't have all of these at first if they chose to have children.

TBH, I'm shocked to read how big these welfare payments have been.

rogerblack

Miranda7 wrote: »

My job is a 100-mile round trip and I take my toddler to a minder in the city where I work to save money - three hours in a car with a toddler every day is fun! So that costs £50 in diesel for a start.

Not addressing the other issues.

On some basic assumptions, I get that you're getting ~19MPG on your car. (Assuming 50MPH*3h - it could be worse if a lot of that is in city)

You could, for example, spend 2500 on a car similar to http://cgi.ebay.co.uk/2006-NISSAN-MICRA-RED-/270731973150?pt=Automobiles_UK&hash=item3f08e2121e , and pay it back within 3 months, even if you diddn't sell the other car.

Needless to say there are much cheaper cars, some of which would only need to work for a month to pay themselves back!

http://cgi.ebay.co.uk/1996-NISSAN-MICRA-SHAPE-MAUVE-PURPLE-/320679334125?pt=Automobiles_UK&hash=item4aa9fa50ed - for example, though you may not want to go this far.